Azerbaijan's strategic policies boost growth: 3.5-4% forecast for 2024

As a result of the strategic policies implemented in Azerbaijan, the country has emerged as one of the most advanced globally, with economic growth on an upward trajectory.

At a press conference held at the Central Bank of Azerbaijan (CBA), Taleh Kazimov, Chairman of the institution, projected that Azerbaijan's economic growth for this year is expected to be 3.5-4%, with a notable 5.5-6% increase anticipated in the non-oil and gas sector. Kazimov confirmed that the July forecasts remain unchanged from those made in April.

Looking ahead to next year, the country's gross domestic product (GDP) is anticipated to grow by 2-2.5%, with the non-oil and gas sector expected to expand by 4-5%. Updated projections suggest that real GDP growth in 2024 will reach 3.8%, amounting to 121.3 billion manats in nominal terms, including a non-oil GDP of 84.7 billion manats. The growth rate observed in the non-oil and gas sector during the first half of the year is expected to continue, leading to an increase in the forecast for real GDP growth in this sector from 4.6% to 5.5%.

Kazimov also provided insights on global commodity prices, noting that the average price of a barrel of oil is expected to be $84.90 this year, while the price of 1,000 cubic metres of natural gas is projected to be $290.10. For 2025, the forecasts are $83.80 per barrel of oil and $233.50 per 1,000 cubic metres of natural gas.

The average annual export price of crude oil, initially set at $60 per barrel for the 2024 state budget, has been revised to $75 per barrel. This revision reflects the anticipated decrease in crude oil supply and prices, as predicted by the International Monetary Fund (IMF). The positive expectations for Azerbaijan's non-oil and gas sector are contributing to higher economic growth forecasts compared to previous years.

The continued growth in Azerbaijan's non-oil and gas sector, along with positive economic forecasts for key trading partners, is expected to bolster the country's economic performance. Growth in natural gas exports is anticipated, driven by increasing demand in several European countries, including Greece, Serbia, Bulgaria, and Italy. Additionally, the expected economic growth in Turkiye, Russia, Georgia, and Kazakhstan will further support Azerbaijan's non-oil and gas exports and attract direct foreign investments.

Overall, the acceleration of global economic growth is positively impacting the economies of the Middle East and Central Asia, including Azerbaijan. The projected economic growth for the region stands at 2.8% for 2024 and 4.5% for 2025, with the Caucasus and Central Asia group expected to see a growth rate of 3.9% for 2024.

Initially, the forecast for average annual inflation in Azerbaijan for 2024 was set at 5.3%. However, this forecast has been revised down to 2.7%. The International Monetary Fund (IMF) maintained its global growth forecast for 2024 at 3.2% in its July update, unchanged from its April estimate. In contrast, the World Bank (WB) adjusted its global growth forecast upward by 0.2 percentage points to 2.6% in June.

The first half of 2024 has been marked by geopolitical and geoeconomic tensions, commercial fragmentation, price fluctuations in global commodity markets, and diminishing disinflationary pressures, contributing to uncertainty in global economic expectations.

According to recent forecasts from international financial institutions, the average annual price of crude oil is expected to range between $75.00 and $85.00 per barrel.

The World Bank's June report on Europe and Central Asia, titled "Increasing the Power of the Private Sector," forecasts Azerbaijan’s economic growth at 2.3% for 2024, with slight increases to 2.4% in both 2025 and 2026. This represents a decrease of 0.1 percentage points in GDP growth rates for 2024-2025 compared to the January forecast. The report also notes that economic growth in the South Caucasus is expected to stabilise at around 3.5% from 2024 to 2026.

In conclusion, the revised inflation forecast for Azerbaijan in 2024 reflects a significant improvement, dropping from an initial estimate of 5.3% to 2.7%. This adjustment aligns with broader global economic projections, where the IMF has kept its growth forecast steady at 3.2% while the World Bank has slightly increased its global growth estimate to 2.6%. Despite ongoing geopolitical and economic uncertainties, including fluctuations in global commodity prices, these forecasts provide a more stable outlook.

For Azerbaijan, the World Bank's report highlights a modest growth forecast of 2.3% for 2024, with a gradual increase expected in the following years. The slight downward adjustment in growth projections compared to earlier estimates, alongside the stabilisation of growth in the South Caucasus region, indicates a period of cautious optimism. Overall, while global and regional economic conditions remain complex, the revised forecasts suggest a more favourable economic environment for Azerbaijan and its neighbouring countries in the near term.